Asia-Pacific markets
In the Asia-Pacific region, markets displayed mixed performance but generally leaned towards positive territory. Chinese equities outperformed as the Politburo signaled a shift toward a more proactive fiscal policy and a moderately loose monetary stance for 2025, marking a significant policy adjustment after years of prudence. The Shanghai Composite and Hang Seng Index both gained, reflecting optimism over potential economic support measures. However, Australian equities lagged as the ASX 200 was weighed down by a disappointing performance in the technology sector, despite a dovish hold by the Reserve Bank of Australia (RBA). The RBA maintained its cash rate at 4.35%, citing signs that inflationary pressures were easing.
European markets
European equity markets opened on a weaker note, maintaining a downbeat tone throughout the morning session. The declines were attributed to a combination of profit-taking after Monday's rally and negative cues from Wall Street, where major indices suffered losses overnight. The sentiment was further dampened by a lack of positive macroeconomic catalysts and cautious investor positioning ahead of upcoming US inflation data.
Most European sectors traded in negative territory, reflecting a broad risk-off sentiment. Healthcare, autos, and travel & leisure sectors managed to post modest gains, supported by stock-specific resilience and lingering optimism from previous sessions. In contrast, basic resources and consumer products, which had been among the top performers on Monday, gave back significant gains as traders locked in profits. Technology and financials also faced notable pressure, aligning with the broader trend of declining risk appetite.
US pre-market
US equity futures were mixed, hovering around the unchanged mark in early European trade. The session lacked a clear directional bias, as investors weighed the implications of the prior day's losses against a relatively quiet macroeconomic backdrop. Futures for the S&P 500 and Nasdaq Composite attempted to recover slightly, hinting at the potential for a steadier open on Wall Street later in the day.
Fixed income markets
In fixed-income markets, US Treasury yields edged higher, with the benchmark 10-year yield rising as traders positioned ahead of a key 3-year note auction later in the day and the US CPI release on Wednesday. German Bunds also saw choppy trade, with yields fluctuating near recent highs. UK Gilts traded slightly lower, with the 10-year yield climbing above 4.3%, driven by broader global yield trends rather than domestic factors.
Commodities
Commodity markets experienced a mixed session. Crude oil prices edged lower, with Brent crude trading within a tight range near $72 per barrel. Investors remained cautious amid ongoing geopolitical tensions and lackluster demand signals, as Saudi Arabia cut January oil prices for Asia and Europe. Precious metals such as gold found some support, with spot gold briefly touching $2,673 per ounce before retreating slightly. Prices edged higher as geopolitical tensions, including Israeli airstrikes in Syria, supported safe-haven demand. The PBoC’s resumed gold purchases further underpinned sentiment. Base metals, including copper, gave up prior gains amid profit-taking and broader risk-off sentiment in global markets. Copper prices rose initially, buoyed by Chinese trade data, but later fell amid a stronger US dollar.
Currencies
The US dollar extended its strength, advancing against a basket of major currencies for the third consecutive session. The DXY index climbed firmly above the 106 level, supported by expectations that Wednesday’s US CPI report could bolster the Federal Reserve’s case for maintaining tighter monetary policy. The euro and the pound struggled to hold ground against the greenback, with EUR/USD dipping below 1.0532 and GBP/USD trading within a narrow range around 1.2740. Meanwhile, the Japanese yen continued to weaken, with USD/JPY edging closer to the 152 mark amid speculation that the Bank of Japan may delay further policy tightening.
Geopolitical developments
Geopolitical developments added to the cautious tone in financial markets. Reports emerged that Israeli forces had advanced into southern Syria, heightening tensions in the region following the fall of the Assad regime. Meanwhile, the US reiterated its commitment to supporting stability in the Middle East while Israeli intelligence continued to monitor potential nuclear developments in Iran. These developments, combined with broader macroeconomic uncertainties, contributed to a sense of unease across global markets. Following the Assad regime's collapse, Israel launched over 100 airstrikes targeting Syrian military sites, including facilities linked to chemical weapons. These actions aim to block weapon transfers to terrorist groups. Maryland data engineer Luigi Mangione was arrested for the murder of UnitedHealthcare CEO Brian Thompson, sparking public debate due to his manifesto criticizing the health insurance industry. Mount Kanlaon erupted, forcing the evacuation of 87,000 residents and disrupting air travel.
Corporate Highlights
- Murdoch Succession Battle: A Nevada court ruled against Rupert Murdoch’s attempt to consolidate his son Lachlan's control over Fox News and News Corp. The court cited "bad faith" motivations tied to preserving the conglomerate's right-wing slant, intensifying uncertainty over the future leadership.
- Comcast Competition Woes: Comcast (CMCSA) fell almost 10% after warning of Q4 subscriber losses exceeding 100,000 due to fierce competition from wireless providers.
- Micron Subsidy: Micron Technology (MU) secured $6.1 billion in subsidies from the CHIPS Act to bolster domestic semiconductor production, marking one of the initiative's most significant awards.
- OpenAI’s "Sora": OpenAI unveiled Sora, a text-to-video AI tool enabling animation and video remixing. Despite offering cutting-edge features, the platform emphasizes safety with watermarks and moderation.
- Mondelez Considers Hershey's Buyout: Mondelez (MDLZ) is exploring a potential $50 billion acquisition of Hershey's (HSY), causing Hershey shares to jump over 10%. Any merger, however, depends on approval from the Hershey Trust, which has blocked similar deals in the past.
- Gallagher’s Expansion: Arthur J. Gallagher (AJG) announced a $13.45 billion acquisition of AssuredPartners, expanding its footprint in property, casualty, and employee benefits insurance.
Economic Highlights
- Chinese Trade Slump: November exports rose 6.7% YoY, missing the 8.5% forecast, while imports dropped 3.9%, marking the steepest decline since September 2023. Analysts warn that U.S. tariff policies could further weigh on Chinese trade in 2025.
- Upcoming US CPI: Markets await Wednesday’s Consumer Price Index (CPI) report, which is expected to solidify the likelihood of a 25-basis-point rate cut at next week’s Federal Reserve meeting.
Recent Earnings Recap
- Oracle (ORCL): Oracle's quarterly performance showed revenue of $14.06 billion, an 8.64% year-over-year increase but $51 million short of expectations. Its earnings per share (EPS) came in at $1.47, a 9.7% annual growth, narrowly missing estimates by $0.01. Despite strong cloud growth of 25-27% projected for the next quarter, the Q2 results and forward guidance left analysts underwhelmed.
- AutoZone (AZO): The automotive parts retailer reported revenue of $4.28 billion, reflecting a modest 2.10% year-over-year increase but falling short of expectations by $32 million. Its EPS of $32.52 saw a slight 0.09% decline from the previous year, missing forecasts by $1.12.
- Ferguson Enterprises (FERG): Ferguson's revenue reached $7.77 billion, representing a 0.83% year-over-year increase but $38 million below estimates. EPS dropped by 7.55% to $2.45, missing analysts’ projections by $0.16, as the company grappled with higher operating costs.
- MongoDB (MDB): MongoDB delivered standout results with revenue of $529.38 million, up 22.28% year-over-year, exceeding expectations by $33.66 million. Its EPS came in at $1.16, a 20.83% annual increase, outperforming forecasts by $0.47. The strong results highlight the company's ongoing momentum in the database-as-a-service market.
Upcoming Earnings Outlook
- GameStop (GME): GameStop is scheduled to report earnings today after the market closes. Analysts anticipate revenue of $887.68 million, down 17.65% year-over-year, and an EPS loss of $0.03.
- Adobe (ADBE): Reporting tomorrow after market close, Adobe is expected to post $5.54 billion in revenue, a 9.75% increase year-over-year, and $4.67 in EPS, reflecting a 9.37% rise.
- Nordson (NDSN): Nordson will also report tomorrow after market close. Forecasts suggest revenue of $708.98 million, down 1.44% year-over-year, and an EPS of $2.62, representing a 6.50% annual increase.
- Kanzhun (BZ): Scheduled to report tomorrow before market open, Kanzhun is projected to achieve $266.36 million in revenue, up 20.96% year-over-year, with flat EPS of $0.22.
- Broadcom (AVGO): Broadcom's earnings on Thursday are expected to show a significant 51.59% revenue increase to $14.09 billion and a 25.23% rise in EPS to $1.39.
- Costco (COST): On Thursday, Costco is anticipated to post $62.16 billion in revenue, growing 7.55% year-over-year, and $3.86 in EPS, a 10.92% improvement.
- Ciena (CIEN): Also reporting Thursday, Ciena’s projections suggest $1.10 billion in revenue, a 2.57% decline year-over-year, with EPS down 13.33% at $0.65.
- HEICO (HEI and HEI.A): HEICO, scheduled for Monday, is expected to report $1.03 billion in revenue, a 9.99% annual increase, with EPS growing 33.78% to $0.99.
This Week's IPO Highlights
- Jackson Acquisition Company II (JACS): A blank check company targeting healthcare services and related technology, confirmed its IPO launch today.
- New Century Logistics (BVI) Limited (NCEW): The Hong Kong-based freight forwarding provider, with trailing twelve-month revenue of $52.15 million (-4.69% YoY), is slated to list on December 10.
- ServiceTitan (TTAN): ServiceTitan, a cloud-based software provider for the HVAC industry, is targeting a valuation of $5.95 billion. Its IPO is expected on December 12, with trailing twelve-month revenue of $653.84 million (+31.34% YoY).
- Metros Development Co., Ltd. (MTRS): This Japanese real estate consultancy, boasting $489.07 million in trailing twelve-month revenue (+52.84% YoY), plans to list on December 13.
- NetClass Technology Inc. (NTCL): A Chinese education software provider, reporting $11.09 million in revenue (+19.79% YoY), aims to go public on December 13.
- Anteris Technologies Global Corp. (AVR): The cardiac device manufacturer with $2.71 million in revenue will launch its IPO on December 13, focusing on expanding its presence in advanced healthcare solutions.
Outlook
Looking ahead, market participants are focused on upcoming US inflation data, which is expected to provide further clarity on the Federal Reserve’s monetary policy trajectory. Additionally, attention is turning to Wednesday’s US CPI report, which could influence expectations for the Fed’s next policy move. In Europe, traders are speculating about potential changes in the ECB's policy stance as they anticipate the upcoming meeting. https://bit.ly/41mrkPn
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